STRATEGIC BUSINESS PLAN Seaport Alliance May 6, 2015 1 - PDF document

STRATEGIC BUSINESS PLAN Seaport Alliance May 6, 2015 1

PRESENTATION OVERVIEW Recent industry changes drive actions to stay competitive Optimized infrastructure investment strategy Customer focused solutions to become the gateway of choice

NEW & INTENSIFIED COMPETITION 3

ULTRA LARGE CONTAINER SHIPS Larger vessels are being planned & built. 4

KEY STRATEGIC FINDINGS FOR THE PNW GATEWAY Inadequate capability to handle multiple ultra-large container ships • Too many small terminals that do not fit the strategic requirements for handling big ships. Formation of mega-alliances • Consolidation of ports and terminals • Shipping lines divesting of terminals Excess terminal capacity • Too many acres dedicated to containers 5 Mercator International, LLC, May 2014

PNW GATEWAY CRITICAL SUCCESS FACTORS Increased terminal utilization Productivity enhancements Rail competitiveness Infrastructure investment Regulatory climate 6

CARGO GROWTH GOALS 2026: 6M TEU 48,500 Jobs Seaport Alliance TEU History and Comparison of Baseline and Upside Forecasts 6,000 4.55% 5,500 Assumes new string at strategic terminal 5,000 2.75% 4,500 2014: 3.4 M TEU 34,000 Jobs 4,000 3,500 3,000 Actual performance 2005-2014 2,500 2,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Actual Baseline Upside Mercator International, LLC 7

CURRENT CONTAINER CARGO FACILITIES PORT OF SEATTLE Terminal 46 Terminal 18 Terminal 30 Terminal 5 PORT OF TACOMA Husky TOTE PCT WUT OCT Terminal 115 APM 8

CURRENT NON-CONTAINER CARGO FACILITIES

PORT OF SEATTLE Terminal 46 82 Acres 2014 Volume: 92K TEU Terminal 18 Volume per Acre: 1131 196 Acres Capacity: 700,000 TEU 2014 Volume: 577K TEU Volume per Acre: 2947 Capacity: 1,200,000 TEU Terminal 30 70 Acres 2014 Volume: 212K TEU Volume per Acre: 3041 Capacity: 600,000 TEU Terminal 5 185 Acres Terminal 115 2014 Volume: 169K TEU 65 Acres Volume per Acre: 916 2014 Volume: 128K TEU Capacity: 1,200,000 TEU Volume per Acre: 1970 Capacity: 200K TEU On Dock Rail Near Dock Rail 2014 Volume: 58K TEU 2014 Volume: 372K TEU Capacity: 700K TEU Capacity: 1Mil TEU

TOTE Terminal Husky Terminal Washington United Terminals 48 Acres 93 Acres 123 Acres 2014 Volume: 212K TEU 2014 Volume: 335K TEU 2014 Volume: 599K TEU Volume per Acre: 3,598 Volume per Acre: 3,598 Volume per Acre: 4,868 Capacity: 300K TEU Capacity: 800K TEU Capacity: 1 Mil TEU PORT OF TACOMA APM Terminal Pierce County Terminal 135 Acres 141 Acres 2014 Volume: 249K 2014 Volume: 426K Volume per Acre: Volume per Acre: 3,018 Capacity: 1 Mil TEU Capacity: 900K TEU Olympic Container Terminal 54 Acres 2014 Volume: 577K TEU On Dock Rail Volume per Acre: 4,069 Capacity: 400K TEU 2014 Volume: 750K TEU Capacity: 1.8Mil TEU

GATEWAY OPTIMIZATION Achieve 70% Utilization | Strategic Terminals | Double Volume 10 VISION 2025 CURRENT YEARS • 70% Utilization • �� 43% Utilization • 6m TEU (5m Int’l) • 3.4m TEU (3m Int’l) • Optimal Acreage: • Current Acreage: 800-850 acres (Int’l container) 1080 acres (Int’l container) IMMEDIATE NEAR TERM MARKET DRIVES GCP GCP DEVELOPMENT STRATEGY DECISION Phased Buildout Berth 4 Construction TERMINAL 5 TERMINAL 5 Phased Buildout Design, Permit & Market Optimize existing ������������� 230-280 acres for diversified portfolio Incremental jobs related to container growth = 14,600 12

Intermodal Yard STRATEGIC TERMINAL CRITERIA • 28,000’ Working Track Ability to handle 2 x 14,000 TEU ships • 3 Trains in/out per day Container Yard • 100 Storage Acres • Yard Gantry Crane /Top Pick Operation • Density 10k-12k TEU per acre/yr Berths - Landside • 2,800’ Berth • 100’ gauge crane rail w/ required infrastructure • 2 x 14,000 TEU ships Berths - Waterside • 55’ Water Depth Truck Improvements Throughput Assumptions • Gates: 8 In & 4 Out Container yard: 1.2 Million TEU/Year • Improved truck queues Intermodal yard: 750,000 TEU/Year

STRATEGIC TERMINAL CONFIGURATION General Central Peninsula Terminal Tacoma Phase 2 Phase 1 Complete 14 14

STRATEGIC TERMINAL CONFIGURATION Terminal 5 Seattle Phase 2 Phase 1 15 15

Opportunities for Excess International Container Capacity Autos & RO/RO Project Cargo Logs Domestic Cargo Bulk Commodities CARGO DIVERSIFICATION Industrial Properties Breakbulk Domestic Container 16 16

DOMESTIC CONTAINER Tacoma’s TOTE Terminal Seattle’s Terminal 115 Seattle’s Terminal 18/30 • Totem Ocean Trailer • Northland Services • Matson Express FACILITIES FORECAST Alaska Hawaii Modest Growth Modest Growth LOOKING FORWARD • Stable market for Alaska/Hawaii • Terminal capacity meets market need • Explore new business opportunities with key stakeholders 17

NON-CONTAINER FACILITIES FORECAST Dry Bulk Breakbulk Autos Logs Liquid Bulk Military Flat Modest Flat High growth Flat Modest growth growth • Stable market LOOKING FORWARD • Adapt facility capacity to meet market demand • Pursue additional cargo diversification opportunities 18

CUSTOMER FOCUSED SOLUTIONS The Seaport Alliance will deliver the best value to customers, community and stakeholders Internal Drivers External Outcomes E Customer Satisfaction Service Delivery Ease of doing business Team approach to deliver Reliability operational excellence Operational Efficiency Cost of doing Business Facilities Return to for the Future Community & Deliver flexible facilities Stakeholders plan and infrastructure for Job Creation big ships & mega- Cargo Growth alliances Financial Sustainability 19

COMMERCIAL IMPLEMENTATION STRATEGY STRATEGIC INFRASTRUCTURE GATEWAY OPERATIONAL PROMOTION EXCELLENCE GROWTH STRATEGY 20

OPERATIONAL EXCELLENCE SERVICE DELIVERY PERFORMANCE METRICS Proposed Service Delivery Key Performance Indicators (KPIs) KPI KPI Description On-time pro-forma vessel arrival and Percentage of vessels that arrive and depart within 12 hours departure of the published pro-forma berth window Vessel Production Average production (berth and crane) against the vessel Truck visit turn time Average time per truck visit. Includes both queue and terminal turn time Average import rail dwell Average container dwell for import rail containers from discharge at the terminal to the train transfer to the mainline railroad Import rail transit time Average transit time by inland destination from the transfer to the mainline railroad to train arrival at the inland rail ramp Proposed PNW Gateway Executive Advisory Council • Beneficial Cargo Owners & NVOCC’s • Shortline Railroads • Ocean Carriers • Trucking Companies • Marine Terminal Operators • Transload/Distribution Companies • Labor Partners • Puget Sound Pilots • Class 1 Railroads 21

GATEWAY RISKS Continued cargo erosion to other gateways Terminal productivity Rail Competitiveness Late to market with strategic terminals Regulatory environment Global trade patterns shift 22

STRATEGIC BUSINESS PLAN GOALS & KEY INITIATIVES GOALS Service Delivery Gateway Growth and Gateway Business Excellence Optimization Environment INITIATIVES � � � Operations Service Carrier Alliance Transportation Center Consolidation Infrastructure � Key Performance Strategy Funding � � Metrics Beneficial Cargo Regulatory Climate � � Freight Mobility Owner/NVOCC Gateway Program Commitment � Cargo Diversification � Rail Competitiveness � Integrated Investment Strategy 23

SEAPORT ALLIANCE KEY METRICS 2025 Measures of Success Cargo Growth 6,000,000 TEU Job Creation 14,600 incremental jobs Financial Sustainability Return on invested capital Net income growth Solid Financial margins 24

THE SEAPORT ALLIANCE 25